In May 2001 Graphite Capital led the management buy-out of Ridgmont, which owned and operated 19 care homes for the elderly. The company was well-managed and represented a good platform with which to grow in the fragmented care home sector.
Ridgmont was able to acquire an underperforming group of ten care homes and turned them around, resulting in strong profit growth. Conditions in the sector improved as anticipated, driven by underlying demographic trends and a reduction in the supply of care home beds. Freehold property valuations also increased materially with the improving economic cycle.
KEY BUSINESS ACHIEVEMENTS
Professionalised its operations and successfully integrated an acquisition
Grew from 19 to 29 care homes with 1,300 beds
Nearly tripled profits to £8 million
Strengthened its management team with the appointment of new finance and operations directors
RETURN ON GRAPHITE'S INVESTMENT
In 2005 Ridgmont was sold to Ashbourne Healthcare, a large trade consolidator, for £88 million, generating a multiple of 6.4 times cost and an IRR of 79 per cent.